Weekly Journal - Nov 3rd 2014

Well, November is finally here and what a month last month was. It was historic in terms of the plunge and the equally exceptional rise back up. It looks like I have to tone down my bearish expectations at the moment. This definitely looks like bull trend continuation.

I think we can see a pullback from around where we are right now - It is the extent and character of this pullback that I will be watching. We are in a seasonally favorable period but everything is over extended right now. Internals are very strong but is also at an area where a little back and fill is possible.

Sentiment is neutral at the moment so it doesnt look like we are going to do much for the next few weeks. Expect a sidewise market with a little downside ahead of us.

Gold and miners did well last week on the downside and my puts on NUGT exploded in value. I took a lot of profit but still net short. Gold could stage a decent bounce this week.

Best,
PM

Market Journal - Oct 30th 2014

So the Fed is now out of the way. And QE has officially ended. So what next? As I think I mentioned in one of the earlier posts, I was expecting a little more upside and then a top mid week. I think we are there. Yesterday might have been the top for this upmove. If this is correct, most likely we will see a good move down over the next week or so and then again another good bounce. Then all hell breaks loose. But lets take it one step at a time.

For now, it looks like we are going to head down for the next few days in the equity markets. A bounce will happen from some level. For now I am thinking 1920-1900 area in SPX as the most likely target area maybe by end of next week. Then lets evaluate again.

Now above is just a prediction. I dont trade on predictions alone. Its just an idea. Trading is more about controlling risk and capital protection. This is the reason why I have diversified into more ideas. Gold for example is heading down in earnest. I have puts on NUGT - which are doing exceptionally well. Then I have shorts on OIH/oil. And I think I already mentioned the GPRO put spread which is also doing very well. I also have a few bearish positions on the index which at the moment are not doing great but I expect them to come back soon.

The next few weeks are going to be very interesting I believe. While I am bearish, the seasonality effect is important to watch as well. For this reason I will be watching the internals very carefully to see if the outline I have above is going to work or the market has something else in mind.

Best,
PM

Weekly Journal - Oct 27th 2014

That was quite a strong week. The big question is still - are we starting on a new uptrend to new highs and beyond? Or is this just a bounce back - a very strong one at that - before things resume to the downside.

Very tough call. But I dont see this yet as a possible move to new highs. At the same time, I dont really have much confidence right now that we are going to new lows in the SPX and other US markets.

What I think is this - Market will likely pullback a little in beginning of the week, then rally into mid week - not much - and then pull back sharply again. We should be a range for next 1-2 weeks before the selloff starts. As you can see the whole thing is quite confusing and so due to this, I am moving my focus from the SPX to other markets for now.

Oil looks very bearish - I will be building shorts there. I am already short the Gold miners - I will continue to build shorts there. Emerging markets look bad - There too having some puts looks prudent. Stock side, I have puts on GPRO, BTU, AMZN etc.

As you can see, I am shifting over from the indices to sectors. At the moment I feel this is the most prudent thing to do.

Best,
PM

Market Journal - Oct 24th 2014

The rally continued, hit a high and started a pullback. I think the uptrend might just be over and we have started a smaller term downtrend. If we exceed yesterdays highs again, then something else might be going on. Best guess here from my side is we decline into next week into the 1900 SPX support. Not sure if we will get more than that. And we should start the next leg of the upmove from there up into 1970/80 area with an outside chance at retesting the highs. This should complete an ABC corrective from the lows.

Now this all will take time and I will reevaluate as time goes on - just wanted to lay out the bigger picture idea I have in mind.

For now - the plan is to play for a short term downtrend...may only be a few days worth.
Today's action will be critical to this plan and idea. Internals are still up and positive but look to be in topping area/overbrought.

I got an idea about shorting GPRO from a forum. Looks like a good one to try out. There is something known as a lockout period ending in December. This should bring some pressure on the stock. I am going to try to short it via a diagonal put spread with the longer leg in April of next year.

Gold is again looking tough to read. Yesterdays ebola new managed to give a little boost to it. I need more time to see where it will go.

Apart from that, I will look to open some bearish spreads today and ofcourse do the usual intraday trading. For today intraday my bias will be on the short side.

Best,
PM

Market Journal - Oct 23rd 2014

Well we got the down day and today seems to be setting up a gap up open. Its tough to say what exactly is going on now in terms of wave count but I would say we are most likely topping an A wave over here and a pullback should ensure in the next few days.

First however it looks like we are going a little higher - maybe retest of yesterdays highs and even exceed it by a few points.

I am still trading intraday ES. Gold is once again looking bad. I re-entered my NUGT puts yesterday and today looks like another big gap down. Need to watch how it holds around here. If it breaks the lows from 2 weeks back we are going much lower. Just holding the puts for now but will evaluate action throughout the day.

Internals on the broad market look quite strong at the moment and this is the reason I am not favoring positional shorts but just looking at hits and runs. Maybe todays action will offer more clarity as to where we are in the bigger picture.

Best,
PM

Market Journal - Oct 22nd 2014

Very strong rally. Its hard to believe that just a few days back we were plunging so quickly. That is the irrationality of markets for you :)

Anyhow, I think it looks clear now that this rally is here to stay. I am expecting a pullback right about here and then after that the market should continue higher for now. We look to be in an ABC corrective upmove of which A is going on right now. Correctives are always difficult to read so my trading will be hit and run only for now. We need to wait for more evidence before taking any longer term position. I think we pull back a bit here, then try higher. Then we should see a bigger move lower. This might happen sometime week only.

Best,
PM

Weekly Journal - Oct 20th 2014

Last week was a very volatile one but it was great for daytrading. Market made its lows and had a great rebound from there. Big question is - what next?

Some sort of temporary bottom has been formed but we should get atleast a retest of that bottom soon. How this will happen is the question. We can go a little higher from here. Or we can go a little lower, try higher and then bigger down to retest the lows. As of now we are in a corrective upmove so its tough to call the waves. But one thing I am pretty confident on is a retest of the lows so I am positioned for that at the moment - not aggressively - but using butterfly spreads.

Internals rebounded last week and the MCO turned above 0. So some sort of short term uptrend is underway. I would give the market a couple of weeks to do a back and forth and stabilize before attempting to read more into the moves. For now I will focus on intraday trading. The positions I have will most likely be left untouched for now.

Gold - this one looks like its going to move a little more higher and then top. I will be playing the miners accordingly.

Best,
PM

Market Journal - Oct 16th 2014

Well, the market did have a mini crash today. 2 times. I had a blast today intraday trading. I also re-entered NUGT puts after exiting calls. I may be a little early here but I think Gold is about to re-establish its downtrend. I am not risking much money here. Always rule of thumb is not to risk 1-2 percent of overall capital.

Coming to the market. I think we are very close to some kind of low. We need to see what kind of bounce we are going to get out of it. I will be looking to enter some bullish positions today. Again size will be smaller due to high volatility. Among others, I am looking to go long Oil and also go long small cap stocks which had a good day yesterday. Similarly I am looking to short VIX - I havent decided whether do this via puts on VIX or VXX. I will decide during the trading day.

So bottom line is - things are still bearish - but we might be close to an interim bottom. A bounce back to the bottom of the channel at around 1940 SPX might happen - best case.

Best,
PM  

Market Journal - Oct 15th 2014

Well the market action was not very inspiring yesterday. The only positive thing about yesterday is that we did not completely fall apart as we did the previous 3 days.

But it looks like the market is doing that premarket right now.

I dont have any pre-notions about today. I will trade intraday only until some stability is back. We are still on crash watch here.

Best,
PM

Market Journal - Oct 14th 2014

Dont have much to say today. Still expecting a bounce to setup most likely today unless we just crash from here - which I think is unlikely.

Yesterday a lot of indicators got very oversold and sentiment also was extremely lopsided. Also we are in the window of the 10 week low. I dont have any positions at the moment except for NUGT calls which I entered yesterday after exiting all puts at a profit. I expect that the miners and Gold might move up for a few more days.

Intraday trading only until we get more signs that a bounce can stick.

Best,
PM

Weekly Journal - Oct 12th 2014

Last week closed definitely bearish. Broke below the SPX channel I have been showing here for a while. As I mentioned last week - we were and still are very crashy looking. I still say be careful out there. But I will be looking for low this week sometime - most likely on Monday or Tuesday. But let us take it one day at a time.

Here is the broken channel.

As you can see, we were in this channel for 2 years almost and now have broken down. The bearish implications are very clear here. Even this low I am expecting this week, we will probably have a very good bounce from it that wont go to new highs.

What I am trying to say is the longer term trend is now bearish irrespective of what market does in short term. In elliot wave terms, we likely will finish A wave of a bigger ABC sometime this week and then set about a counter trend B wave which may last into November maybe December. This sets up a C wave later. But one step at a time.

Looking at internals - we are very oversold. And several indicators are at an area where the market has bottomed before.

Be careful for the next 2 days. Still crashy. But I am looking for a low to setup soon. I dont have any positional positions as on now on stocks. Still have on the NUGT puts - I am not very sure what to do with this but I dont think the low is there yet. It will be interesting to see what it does this week. I will be trading ES intraday tomorrow - these fast moves make for good in and out trading. I will be looking for a low which should be of atleast 10 week low magnitude - if things start to look good, I will be setting some bullish to slightly neutral positions via options - this will be a fly and a bull spread. Tentative for now. Lets see how tomorrow goes. I think we look really bad in the morning which recovers by end of day - Just a guess! :)

Best,
PM

Market Journal - Oct 10th 2014

Thats was quite a statement day by the bears completely wiping out the gains of the day before and more. I have to reevaluate my thoughts here. We are in a real crashy sort of setup here. I would say be very careful. I traded in and out of ES yesterday - the fast moves made for some great trading. I will continue to do that today. Remember VIX is high - reduce position size. And dont be surprised with anything today and next week.

I closed half of my NUGT puts yesterday at a good profit. Still holding the rest. I will see how it goes based on action today. The precious metal stocks were very weak yesterday compared to the spectacular rally the day before.

If I have to take a guess at the market the next few days - today we bounce and maybe give it up by end of day. Monday/Tuesday we have another bear move to the downside. This could be the big one. I dont like to say 'crash' usually - But this is a real possibility this time - sometime next week.

Be careful.

Best,
PM

Market Journal - Oct 9th 2014

That was quite a reversal to the upside yesterday. I was expecting a little bounce but the strength of the rally was amazing - this is what Fedspeak can do.

So I think yesterday has changed things atleast for now. We tested the channel bottom again and bounced hard. This is one important thing. We also have made a lot of improvement in the internals as well.

Channel touch and bounce -

Next take a look at the MCO configuration on NYSE. Looks constructive - bottom above bottoms - still below the zero line though. I will be waiting for this to get above the zero line to set up a strong buy.

This could turn up as early as today. But lets wait and see. I will be looking for weakness even after we turn up so that I can get better buy prices.

Many other things are there. The put call ratio supports the bottom idea. Some other ratios I watch also does the same. Hurst view was to expect the 40 week low around this timeframe. Lastly seasonality also is supportive of a year end rally.

So all in all, I have to conclude yesterday's low may have been the low of this entire bear move. However I think we will get a pullback sometime today before we mount another rally attempt. And again maybe more pullback tomorrow before we get into gear on the upside. My stance is changing to bullish.

Gold rallied as well yesterday. It was a huge reversal day for the miners. While I still hold my NUGT puts, I will likely exit them today. I had a good profit on them - unfortunately I wasnt able to exit them in time. So I will likely just take what I have and close them and then wait and watch for the next entry either long or short.

I will try few intra trades today on ES. Mostly likely first down. Then up.

Best,
PM

Market Journal - Oct 8th 2014

Yesterday was quite a bearish day - as expected. I covered all my shorts in the last five minutes of the day. All except for NUGT puts. I wanted to roll this to lower strikes but wasnt able to in time. So I might do it today. However gold is looking to open up so I am not very sure how to time this out.

So we went lower but didnt test the bottom yet. We might do it today before setting up a bounce of maybe a few days. I am going to play this day by day for now. I think today we set a bottom and then rally for a few days. Then we see if its for real or if we are going to have a bigger breakdown below the channel that the market has been in for the past 1 year and more.

I will put up a more detailed analysis tomorrow. For now, I am just going to play the ranges. And will look for scalping opportunities on the upside today - I am not too bearish for the day. I expect we will find support somewhere today and stage a rally attempt which will likely last for few days BUT should eventually fail.

Best,
PM

Market Journal - Oct 7th 2014

Well, we are in a trading range now. I think we have tested the higher end of the range and now its time to test lower. Most likely today will be bearish and we should trade lower with a bearish bias. I will be looking for opportunities to scalp on the short side on ES.

Gold finally had a good bounce. Tough to say for sure but I dont think downside is done yet - but for more, we need to break below earlier lows of 1178.

Best,
PM

Weekly Journal - Oct 6th 2014

Market rallied strongly on Friday. To be honest, I did not expect this much strength. Now we are again at a cross-junction. I think market has to reverse back down within the next 10-12 points in SPX for atleast a retest of the lows/channel bottom.

Since I covered shorts before the rally started, I am content with being on the sidelines comparatively. I did trade the long side on Thursday and Friday and made some coin while we wait. I also entered a couple of bearish spreads toward the close on Friday. I suspect this is early and we may continue the pop upward for a little bit more. But with the internals bearish as they are it is unlikely that we are going to see sustainability to this rally.

Not too much to add on internals. The bounce has turned the MCO upward but it is still far from the zero line. As long as it remains below, I will remain bearish.

The overall AD line also looks quite bearish in spite of this current bounce.

So the plan is to continue with these bearish positions atleast for the next 1 week after which we re-evaluate.

Gold continues to be bearish and my NUGT put positions are doing quite well. Let us look for a real washout here soon.

Best,
PM

Trading Journal - Oct 3rd 2014

A pretty good day for me yesterday. I exited all bearish positions for good profits and even managed 2 good scalps on the long side on ES futures. Overall quite happy with my bear campaign and results. Only positions I hold now are NUGT puts. This is a longer term position so I will continue holding - also as I continue to be bearish on the GOLD sector.

The butterfly position on SPX was a double. The bear spread on SPX was also almost a double. IWM and QQQ puts performed well. And I already mentioned my puts on the coal sector. Overall all did really good. My positions were mentioned in earlier posts in detail.

So big bounce yesterday. This was kind of expected once we tagged this channel I show below. It has held very strong so far this year and yesterday was no exception. This was the main reason I decided to take profits on bear positions.

Tagged the channel and rebounded but what next? I dont have skin in the game at the moment but what I feel is there is going to be more weakness - we are not going to just turn around and keep rallying from here. At best, we are going to see retests of the channel bottom over the next several days. What if this channel breaks? I think then it gets very interesting. Next support should be at around 1900 where the 200 DMA is. Breaking this will be even more bearish but lets deal with that if and when we get there.

As always, my next buy decision will be based on internals. Nothing much to say about MCO. It seems to be building a base. If we can do this over the next several days and turn back above the zero line - it will be a buy for me. Right now its far away from doing that - and I think its going to take several days in order to do this. Market should be choppy and volatile until then.

Today I will scalp on both sides as opportunity presents itself. I think we have a date with 1960-1970 on ES and then we should have a date with the lower side of the range at around 1920 ES. I dont mean to say it will all happen today - It should over the next few days though. Until we get a buy on MCO, I will continue with very short term scalping.

GOLD continues to be bearish as I mentioned above. Its the only area where I have shorts on right now. And these are longer term positions in the money right now. So I continue to hold them.

It seems to have found short term support at around this level of 1200$. Break this and earlier lows of 1180 will come in a hurry. Break that and its all the way down to 1100$ which is also my longer term target. Will it get there? Only time will tell. For now, holding shorts.

I will post updates on Hurst cycles later on the general markets. This is around the time the 40 week lows are expected.

Best,
PM

Trading Journal - Oct 2nd 2014

Well absolutely no strength yesterday. Looked like fund managers were waiting to sell after end of quarter - and were holding the market till now. Let us see what the next few days will bring. I think a lot of back and forth consolidation and maybe more push lower.

The market is oversold short term but that itself is not enough to say we will not go down further. This situation is what can lead to even more serious selloffs to happen.

Today/tomorrow I think we bounce a little before resuming the bear move next week.

Internals continue to look the same. One thing though is that the MCO did not move to lower lows so this might be the beginning of constructing a bottom internally. Price however may have more to deteriorate here.

I continue to be short overall. Adjusted positions a little yesterday. Today I will look to scalp on the long side to take advantage of any rallies.

Best,
PM

Market Journal - Oct 1st 2014

Seasonally today is expected to be a strong day to the upside. However yesterday was weak. So need to see how much strength we see. Yesterdays last minute selling was heavy however it could have just been due to end of quarter. I exited some of my bearish positions in stocks yesterday for decent profits and also entered puts in IWM and QQQ. Core short position is still intact.

Considering today's strength, the plan is to scalp on the long side.

Best,
PM

Trading Journal - Sept 30th 2014

Not too much to write or share. The big gapdown yesterday let to the reactive buy the dip folks closing the market higher compared to where it opened. I would have hoped for an up open to continue the sell but the market had other ideas. This has however not changed much internally and the market remains vulnerable to sell offs.

There is an expectation to a month end/quarter end rally so I am not sure what to expect today however a sell off would be very telling. For now maintaining bearish stance and positions.

Gold continues to be very weak so I closed off my straddle and went short via NUGT puts in December. This could be a potential multibagger.

Best,
PM

Weekly Journal - Sept 29th 2014

Big bounce on Friday. Expected a bounce between Friday and Monday but everything together on one day was a little too much. I am not sure yet if the bounce is done. If it is done, then we are likely to head back downward. I expect we trend lower this week ofcourse with bounces in between. I am thinking we may have a trade-able bottom in around 10 days. Maybe end of this week - to the next Tuesday/Wednesday. Just an idea I have based on some cycles and seasonality I follow.

Lets take a look at internals.

The bounce on Friday turned up the MCO but its still a long way to go to the zero line. The NYSI is below the zero line decisively and this will put pressure on the market. Friday looked like stop running to me and a lot of shorts might have covered. I would be watching this weeks market with a lot of interest. Technicals are decisively bearish. How long will the market try to hold it together? I will also be on the lookout for a bottom after Friday Oct 3rd.

Best,
PM

Market Journal - Sept 26th 2014

Yesterday turned out to be a great day for me and for bears in general. The day before's bull move was odd - very odd - and yesterdays breakdown just goes to show how made up the rally before was.

So yesterday was a real breakdown and market is not just going to turn around and rally over here. Best case is for a couple of days back and fill and maybe a little bounce before the move down continues and maybe finds a bottom this time around. So at minimum I would say a trade-able bottom is atleast a week away - most likely more.

But instead of trying to guess, lets wait and see what the market internals tell us.

The MCO is very oversold. I dont think it will continue to move straight down from here. Most likely we get a bounce and then probe a little lower before starting to build texture and bottoms above bottoms. But this is a process that will take time which is why I mentioned atleast a week before we get any kind of bottom that can be traded.

The NYSI is below zero and this is not good for the IT bull case. It is going to continue down for a while and most likely the market with it.

Coming to my positions. I think I am very short side heavy at the moment. And volatility has increased a lot. Time to lighten up a bit and maybe reload later. I have already outlined my positions in earlier posts. I will be lightening up and taking some profits today.

Best,
PM

Market Journal - Sept 25th 2014

Surprisingly strong rally today. I was expecting a rally but not of this magnitude. However even though we rallied strongly breadth did not improve much and sells still remain in effect. We will likely move back and forth a little before going down again - this is my best read on the market at the moment.

Yes - today's rally has strengthened the bull case but still bear remains in force.

Lets take a look at the MCO -

Moved up a little today but nothing abnormal. We might have however seen the low for the MCO on this move but price should have more to go. Let us wait and see how the next 2-3 days work out. The decline should start within that time else something else is going on and we will have to reevaluate.

The NYSI is right at the zero line. Breaking down through it will put even more pressure on the market. The market is also seasonally weak until around beginning of October.

Several of my shorts performed magnificently today. WLT was down 20 percent today! BTU was also down but not by much. Couple of others rallied a little but I have time on my options to capture the expected resumption of the downmove.

The butterfly on SPX is stable. The Iron condor on SPX will expire worthless - mostly likely - earning some premium. I am on the lookout for creating next week's spread. I will most likely enter this sometime tomorrow or Friday. I wanted to see a little more of a downmove before doing this.

Gold is just meandering for now but I think we get a decisive move starting from tomorrow. Looking at the charts I feel it might break down again - hard and fast. I dont care which way it moves as long as it moves - I have a strangle position on NUGT. I just need a big move to profit.

Best,
PM

Market Journal - Sept 24th

The market continued to be weak yesterday. Breadth remains horrendous and will take a while before it repairs itself. We are likely to get a bounce today maybe after some initial backing and filling.

My current positions
Short BTU, WLT, TNA, GRMN, IDCC via puts.
Straddle on NUGT - expecting a big move either way. Might be up but lets wait and see.
Butterfly on SPX - 1900-1950-2000 calls. This could turn out to be an interesting trade.
Long VIX Dec calls.
Long a bear put spread 1980-1940.
Long SPY calls as a hedge - entered yesterday.

Overall positions are heavily weighted toward the bear side so I might take some off today. Not very sure how much of a bounce we might get and this is the problem. But either way I do not think the bear move is done yet.

Best,
PM

Market Journal - Sept 23rd

Well, after yesterdays market move, things look more bearish. Need to be seen whether bears get something substantial moving this time or it will be like the numerous other times where the bulls take back control.

Yesterday was a good day for me. I entered all bear put positions as planned and what I had earlier on the bear side also performed very well. IDCC, GRMN, TNA, BTU puts and the SPX bear spread are all doing good. I also entered WLT puts - this stock had a big breakdown yesterday as well.

Today also seems to be opening down. But a bounce is possible somewhere today. I will like consider hedging today with SPY+IWM calls. Will make a decision on when exactly to do it during the trading day based on internals.

MCO went down hard yesterday as can be seen from chart below. Will we have a bounce? Or more deterioration before that? Either way bear rules for now - until we have a turn up in MCO and eventually a move back above the zero line. This will take a while which is why I believe the bear is here to stay atleast for a few more weeks.

More charts tonight.

Best,
PM

Weekly Market Journal - Sept 21st 2014

The market was surprisingly strong last week. This may have been in part due to the Alibaba IPO. Now that is out of the way, maybe we will see downside pressure come in next week.

MCO turned down on Friday and remains below the 0 line. Until we have a turn up above the 0 line and an upturn in NYSI, I will not enter any long positions except for intraday hit and runs.

I am not very fond of shorting either as it has been a very strong bull market and all bears have been able to do is make the market go sidewise.

Nevertheless, I am maintaining my bearish posture until the internals tell us the next upmove is starting. I explained in my earlier post how I am positioned. Not much change except now I have entered an Oct Bear Put Spread position - 1980-1940 strikes - to profit from any quick move downward in next 2 weeks.

I have also entered an Iron Condor position with out of the money strikes - for next week - to earn some relatively low risk premium.

I also am entering small positions in puts in the following most likely on Monday -
TNA
BTU
GRMN
IDCC

I dont think I will overstay my welcome in above shorts. And position sizing is very small on all. Less that 2 percent risk on overall equity.

Gold remains extremely bearish. Now a bounce might come in next week. I am considering shorting the miners via puts. I will make a decision during the week.

Lastly VXX. I am considering a strategy over here but will not enter it until I get a confirmed bull move. This will be a bullish strategy to be executed in a way which will not risk much capital in account. Basic idea will be to construct a short call spread maybe 30-26. VXX has been going down longer term and I expect we will be lower by end of year. The idea is to earn some premium with minimal risk. I will outline details of this strategy once I enter it this week.

Best,
PM

Trading Journal - Sept 17th 2014

Stocks.

Seasonally the month of September is supposedly weak for the stock market. And we have got that weakness so far although its been very muted. I don’t use seasonality exclusively but it serves as a vague guide to keep in the back of your mind – following it blindly is a definite no-no. But when used in conjunction with other ideas and methods, I have found it to be useful.

Internals have been horrendous so far this month. But price has done little to catch up with it. Which makes me wonder – will the internals improve and catch up with price? Or will price quickly breakdown in the near future? Need to wait and watch what will happen.

Above chart shows have I have been talking about. The MCO has travelled a lot below the zero line but prices have been mostly rangebound even though we declined a little initially.

So how am I playing the market right now? Ever since we got a high below a high on NYMO and it then turned below the zero line, my bias has been bearish. I exited all long positions and began a short ES position. As I am not too bearish, I have been selling weekly puts on SPX against my short position. Total risk is limited to 2 percent of total equity.

Current Position: Short ES at an avg price of 1999. Short SPX 1960 puts current week. Will roll over to next week puts on Friday. The idea is to earn premium on position in a market neutral way as long as NYMO remains below zero line.

I expect the NYMO to put in a bottom above a bottom and the NYSI to turn back up toward end of September/ or beginning of October. Seasonality tells us to expect this. Also as per my hurst analysis, we should see an important low by then – without going into too much detail – this could be the first 40day low after the 18 month low which was most likely seen on August 7^th. If this analysis is right, we could have a bullish Oct-Dec and I intend to take advantage of it through outright positional plays in few select stocks and index option bullish spread plays. But first let us let the market specifically the NYMO, tell us that its time to be bullish.

So far this year and most of last, the market has been moving in a bullish channel outlined above. I was expecting that market might decline toward lower range of the channel to set up a buy by end of month but market seems to be having other ideas. Let us wait and see if the internals give a decisive buy, else playing a slightly bearish but market neutral strategy as outlined above will be my game.

Gold.

Gold has been on a confirmed sell ever since it broke down from the triangle outlined below.

It looks like it might test the 1180 area again before we get a chance to play the longer term bullish side. There is a cycle low expected in the November timeframe – I will be watching this to set up a longer term bullish position via options.